India-US solar row: WTO panel to check compliance

The dispute settlement body of the World Trade Organization (WTO) has decided to set up a panel to examine whether India has complied with its ruling last year that had gone against the country for favouring local manufacturers in its solar power programme, on a petition filed at the multilateral body by the US.

Late last year, the US approached the WTO, seeking action against India for non-compliance of the ruling. It claimed that India continued to resort to the “WTO-inconsistent measures”. India, however, asserted that it had already complied with the WTO order and requested it to set up a panel to determine its compliance, sources said.

“At its meeting on February 28, the Dispute Settlement Body (DSB) agreed to establish a panel to determine whether India has complied with a previous ruling regarding its domestic content requirements for solar cells and solar modules,” the WTO has said in a statement.

In 2013, the US filed a complaint before the WTO, arguing that the domestic content requirement imposed under India’s solar programme violates global trading rules by unfavourably discriminating against imported solar cells and modules. In February 2016, a WTO panel ruled that by imposing the domestic content requirement, India had violated its national treatment obligation. US solar exports to India have fallen by more than 90% since India had brought in the DCR rules, the US had claimed.

After the WTO ruling in its favour, the US wanted India to scrap all the tenders awarded under the latter’s national solar mission and float them afresh so that more foreign players would participate, sources had told FE earlier. However, India made it clear that it could comply with the WTO ruling only prospectively for the sake of natural justice and the tenders already awarded (before its appeal against the ruling was rejected by the WTO in September 2016) couldn’t be scrapped.

India stressed that it had already complied with the ruling and stopped issuing solar tenders with domestic content requirement (DCR). According to an official estimate, about 500 MW of solar projects (with DCR stipulation), which were in the pipeline, have been affected by the WTO ruling.

In a bid to promote local manufacturing, the government had earlier mandated that a certain portion of capacity addition would be reserved for domestically sourced modules under the national solar mission.